Participation / representation in insolvency procedures
The insolvency procedure in Bulgaria is performed by a trusted assignee, appointed by the local county court which stipulates the insolvency of the debtor, with the intention to satisfy the creditors. The whole procedure has been precisely detailed in art.607-760 of the Bulgarian Commercial Act, which states that the foreign creditors have equal rights together with the local creditors. And during the last couple of years we have participated in a number of insolvency procedures against local Bulgarian corporate bodies (mostly property developers), who have failed to perform their obligations for one reason or another. Тheir failure has taken different forms - not completing the off-plan complex on time, not transferring ownership over one or several apartments in it, or lack of voluntary repayment after proclaimed court decisions against them, being the result of a litigation procedure/lawsuit performed by us (visit the section Debt recovery for more information). The outcome has been that many people, mostly foreign property investors have invested millions of Euros in non completed complexes in Bulgaria and have been left with empty hands and empty pockets due to continuous non-performance by a local developer. The practice shows that many have entereded court claims for bringing the company-seller into insolvency procedure with the intention to collecting and sharing the table of assets among the judgment creditors. From legal point of view this is the last and only effective chance to recover the investment or at least part of it.
If you are owed money by a developer who officially enters into insolvency procedure (usually started on the base of a claim entered in court by similar investors like yourselves) on the base of non-performed purchase contract or on the base of a court decision in your favor, then you should participate (personally or via appointing a Bulgarian lawyer as per the provision of the Law) in it as a judgment creditor – simply because after sharing the table of assets the company-developer it is likely that it will be liquidated and will no longer exist. This is a short-ending chance for you, because once the insolvency has been proclaimed, there is usually 1 month term for the creditors to apply before the trusted assignee. The reason of the Laws is to reach quick satisfaction in short deadlines, this is why further waiting and wondering what to do, is not in your interest – time is not your friend any longer, since a developer has been brought into insolvency. In other words – if you don’t step in the insolvency procedure until the 1st appointed meeting of creditors, it is likely tht you won’t have another legal chance to recover your money in the future. If you do not reside in Bulgaria, then you should appoint a local Bulgarian lawyer to represent you during the insolvency procedure, where to fill in the needed applications on your behalf before the trusted assignee about the debt owed to you, to participate on your behalf on the meetings and to vote during sharing the available assets of the debtor and at the end of the process to open a bank account in your name where the trusted assignee can deposit the money due to be paid to you. Briefly these are the main activities in the standard insolvency procedures in Bulgaria and we cover performance of all of these via power of attorney in order to achieve a positive financial outcome for you. Please refer to the section Our fees for more information and guidance; as well feel free to contact us for with your questions.
In conclusion we can say that "less money to give is less to claim" - insolvency procedures against local developers (i.e. more expenses and fees) are not just some result of the financial crisis, but only a result of the lack of adequate advice in the past, to prevent property buyers from making huge and risky payments towards developers, i.e. to secure the investment with valuable legal advice at the early initial stage.